Selecting superior managers, dedicated to eliminating
bureaucracy and building businesses, to run GE's operating units
in entrepreneurial fashion.

Creating a transparent financial
reporting structure that
enables CEO to monitor the manager's individual performance by the
numbers. Under the CEO's watch, managers have wide latitude in building
their GE units, as long as the numbers demonstrate the wisdom of their
ways.

The revolutionary massive changes introduced by
Jack Welch worked. By the mid-1990s GE had become the strongest company
in the United States and the most valuable company in the world, as measured
in market capitalization. Today, General Electric succeeds
in dozens of diverse businesses, and is continuously at the vanguard of change.
Some years ago however, in locations throughout GE, local managers were
operating in an insulated environment with walls separating them, both
horizontally and vertically, from other departments and their workforce.
Employee questions, initiatives, and feedback were discouraged.

In the new
knowledge-driven economy, Jack Welch, the then CEO, General Electric,
"viewed this as anathema. He believed in creating
an open collaborative workplace
where everyone's opinion was welcome."1 He wrote in a letter to
shareholders: "If you want to get the benefit of everything employees have,
you've got to free them –
make everybody a participant. Everybody has to know everything, so they
can make the right decisions by themselves."1

Jack Welch planned to launch a revolution at GE
from the day he took over the company and wasted no time in executing his
plan. No one in American business had the vision to transform a basically
healthy major company, to fix something that wasn't broken.

Welch's revolution began from the top. He made
GE leaner, tougher, faster more competitive – with fewer people, fewer
business units,
few managers, and more leaders. Though to many GE had been an icon, a
sacred institution that could not be tampered with, Welch applied a kind of
"survival of the fittest" rule of thumb to GE businesses and to GE
personnel; those who survived were the ones who were needed.5 For
twenty years he led a series of revolutions at GE, seeking to recast a
highly bureaucratic, labor-intensive and slow corporate giant into a highly
productive entrepreneurial organization
that would
function with speed,
simplicity and passion of a small company. Given GE's size and
complexity, it was a heroic task, but Welch knew that to make GE the world's
competitive enterprise,
transformational change was essential.

CAP was implemented by Jack Welch to help
drive change
throughout the organization. "Although he started with senior managers, he
also provided other managers with the tools and training the needed to
engineer and drive change throughout the company."4

GE Values

GE's values are so important to the company, that
Jack Welch had them inscribed and distributed to all GE employees, at
every level of the company. But before the cards were furnished to the
staff, GE had come to consensus on which core values it wanted to cultivate
in its employees. Many hours were spent at GE's Leadership Institute and
elsewhere deciding on exactly what those values should be.

In 1987 GE issued companywide guidelines. It
was an 80-page booklet called Integrity: The Spirit and the Letter of Our
Commitment. Every employee was required to read the booklet and sign a
card that they had read it.

In that booklet, Jack Welch wrote in his
Statement of Integrity:

Integrity is a rock upon which we build our
business success – and our quality products and services, our forthright
relations with customers and
suppliers,
and ultimately, our winning competitive record. GE's quest for competitive excellence
begins and ends with our commitments to ethical conduct.

GE Values Statement says:

While GE has always performed with integrity
and values, each business generation expresses those values according to the
circumstances of the times. Now more than ever the expression and adherence
to values is vital...

Jack Welch does a good job of
illustrating the need for proactive
change management and
constant
reassessment when he says, "If the rate of change inside an organization
is less that the rate of change outside... their end is in sight". One of
the tools used by Welch to ensure constant reassessment and benchmarking is
the annual review undertaken by every GE executive and staff member. Once a
year, every employee's performance evaluated and awarded a numerical ranking
of between 1 and 5. "The implicit understanding is that both the individual
and his or her score are moving up or it's time to leave the company."2